Finding the right option

Illustration by Steph Bravo

(Ed. Note: Inquirer Property will be running a series of columns that will talk about the nitty gritty details of buying a home. The column is meant to guide property buyers in finding their dream home.)

I want to have my own home. But how do I pay for it? Am I really ready for such a huge financial commitment?

This is the usual conundrum faced by many first time homebuyers who may feel intimidated by the prospect of investing in a big-ticket item such as a house and lot or a condominium unit. Not surprising really, considering that such an investment is a big leap for many.

But you don’t necessarily have to shell out all your hard-earned life savings to purchase your dream home. There is that option to avail of loans, which will allow you to achieve your dream without going bankrupt.

Fortunately for today’s home hunters, real estate companies offer practical and affordable payment schemes that make buying a home much easier. Availing of home loans have also become more hassle-free nowadays, thanks to the numerous promos offered by banks.

Here are some options that you may want to consider as you move one step closer to your dream home.

Gov’t housing loan

A number of Filipinos often turn to the Home Development Mutual Fund (Pag-Ibig) for an affordable home loan.

Exclusively offered to its members, this housing loan program was created especially for the unserved and the underserved sectors, offering low interest rates and longer loan terms, while ensuring a more streamlined process.

According to its website, it announced earlier this year that it lowered its rates to only 3 percent annually from the previous 4.5 percent  under the affordable housing program for the first five years of loans up to P450,000 over a maximum 30-year repayment period.

Interest rates for the end-user financing loan program also dropped to 5.37 percent from 5.5 percent for one-year fixed term loan, and to 6.375 percent from 6.5 percent for three-year fixed term per year effective February 14, 2018.

It likewise removed the savings requirement in its housing loans and had cut down to half the loan application requirements from 14 documents to just seven documents.

A list of requirements is readily available online along with a loan affordability calculator, which will tell you how much you can borrow based on your income, preferred repayment term and fixed pricing period.

However, not all developers may accept this financing, especially for upscale projects. Best to check first with the real estate company you’re buying from.

In-house financing

Some real estate companies offer what they call “in-house financing,” which is an extended payment term with above-average interest rates.

If you don’t mind the higher interest rates, then this option may be for you. A downpayment equivalent to at least 20 percent of the total contract price, along with the usual requirements such as certificate of employment, bills, a copy of your income tax return and pay slip among others, would usually be enough to secure an approval.

Home loans from banks

This is the usual route taken by most homebuyers: availing of a home loan from a trusted bank. Compared to in-house financing, home loans from banks offer lower interest rates and can shoulder up to 80 percent of the total contract price.

What’s good is that most banks have become more competitive in their offerings, attracting potential homebuyers with fixed interest rates and flexible repayment terms. It goes without saying, of course, that you should look for a bank with a solid, credible reputation.

In the case of Metrobank, for instance, one can enjoy a maximum loan amount of up to 80 percent of the property’s selling price and low fixed interest rates for up to 10 years that can protect one from sudden rate surges in the property market.

Metrobank also makes your future home within easy reach with its payment options of up to 25 years. A home loan from Metrobank can be used to purchase a lot, a house and lot, a townhouse or a condominium unit; and for renovation or expansion, refinancing and even the reimbursement of renovation expenses.

A cursory look at the Metrobank website alone will readily give you an idea of the requirements you need. Also available is a loan calculator, which can give you an idea of how much loan you can take out based on your earnings, as well as a property finder, which provides prospective home buyers a list of properties for sale.

Indeed, finding your dream home need not be such a hassle and a harrowing experience.

Remember, all it takes is thorough research, some pretty good planning, and of course, the financial discipline to see this investment through.